Quiz #196 answers

• 1. If there is more "money" in the economy its value declines.

Answer: False

• 2. A public works program that employs workers to dig deep holes on one day and then fill them in again the next day has exactly the same impact on current economic growth ($-for-$) as a private firm investing in a new factory.

Answer: True

• 3. Economists note that the automatic stabilisers in the government's budget increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the budget outcome to the business cycle would be eliminated if the government followed a balanced budget fiscal rule.

Answer: False

• 4. If a nation is enjoying an external deficit, then one other sector must be spending more than it is earning.

Answer: True

• 5. Premium Question: It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.

Answer: True

• 6. Special Xmas Holiday Question: Santa Claus and his elves are in danger of becoming environmental refugees because:

Answer: there is no threat - I believe in Santa Claus and climate change is just a rumour spread by socialists.